Exclusive Interview: Hassan Sha'sha'a

Emirates steel strategy and development vice president Hassan Sha?sha?a

Abu Dhabi steel giant Emirates Steel Industries is pressing on with an aggressive expansion plan covering inward investment and acquisitions. Is this a means of bringing stability to the multi-billion-dollar domestic steel market – or of monopolising it? Construction Week talks to strategy and development vice president Hassan Sha’sha’a.

Following the G20 meeting held in London on April 2, an official communiqué was issued by the countries involved. Among its themes was the rejection of protectionism, defined as the safeguarding of domestic trade by imposing rules to limit international competition. This pledge was intended to promote global trade and investment, and aid the fight back from the global financial crisis.

“World trade growth has underpinned rising prosperity for half a century,” the statement said. “But it is now falling for the first time in 25 years. Falling demand is exacerbated by growing protectionist pressures. We will not repeat the historic mistakes of protectionism of previous eras.”

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Following the communiqué, any protectionist policy was scrutinised globally, which is why some have seen fit to question last month’s decision to reimpose the 5% customs duty on steel and cement imports into the UAE.

For decision makers it is tough to balance the need to protect local industry with the good international PR that comes from maintaining freedom of trade.

According to Emirates Steel Industries (ESI) strategy and development vice president Hassan Sha’sha’a, however, the giant government-owned steel producer is more than capable of competing on a level playing field.

“We believe in the free world system,” he says. “That means that if we cannot compete in a business then we shouldn’t be in it. We are building this company so that we will be able to compete on the international market.”

In fact, Sha’sha’a says that the import tax has had little effect on the business of ESI. “The 5% tax that is imposed on rebar imports does not apply to the cut-and-bend facilities,” he explains.

“In reality, the 5% tax does not apply to most of the steel imports that come into the UAE, so when the import duty was removed and then restored it had a limited impact on us.”

Expansion
ESI has embarked on an aggressive expansion policy, which it does not hide from view. Last week, international media, some of which were flown in for the occasion, were taken on a tour of the firm’s new facilities.

The first phase of its expansion, completed last month, cost US $815 million (AED3 billion) and boosted its production capacity from 800,000 tonnes per year in 2008 to two million tonnes per year this year.

Phase two will boost capacity to three million tonnes by 2011 at a cost of $1.63 billion. ESI is aiming for a vast total production capacity of 6.5 million tonnes by 2014. Already its energy consumption, with phase one of its expansion fully operational, accounts for 15% of the total power requirement of Abu Dhabi island.